TMI Blog2004 (4) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... ards, these references/appeals are before the court. All the references/appeals pertain to the same assessee. The following are the questions referred by the Tribunal: "I.T.R. No. 158 of 1985: 1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the provisions of section 12 of the Income-tax Act were applicable to donations of Rs. 41,359 which were credited to the suspense account? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in deleting the addition of Rs. 2,00,739 made by the Income-tax Officer on account of capital expenditure? 3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in deleting the addition of Rs. 7,820 and Rs. 1,900 being credits in the name of Mahatma Satyanand and Mahatma Gianand, respectively? 4. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in deleting the addition of Rs. 34,163 made by the Income-tax Officer on account of membership subscription? I.T.R. No. 99 of 1986: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me received by the assessee-Mission by way of subscription from its members by ignoring the material fact that this, as a matter of fact, was a payment entailing contractual liability of the payer being entitled to the membership of the Mission and as such not voluntary in nature? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in deleting the addition, made by the Income-tax Officer of Rs. 10,919 being interest on fixed deposit and savings bank account of the assessee-Mission with various banks by ignoring the material fact that this income had not been set apart for any specific utilisation? 3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in deleting the addition of Rs. 2,26,662 made by the Income-tax Officer holding it as capital expenditure? 4. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in excluding the agricultural income of Rs. 8,187? I.T.R. No. 107 of 1990: Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the income rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the court, which will cover some of the issues as under: "1. Whether, the income received by the assessee by way of subscription from its members was assessable to the Income-tax Act, 1961, or was exempted under section 11 thereof? 2. Whether, the amount spent on acquiring/constructing capital asset was rightly deleted by the Tribunal? 3. Whether the Income-tax Appellate Tribunal was correct in law in holding the interest income earned on fixed deposit receipts as income from property held under trust? 4. Whether, the Income-tax Appellate Tribunal was correct in law in holding that the agricultural income was income from property held under the trust?" In I.T.R. Nos. 141 and 171 of 1989 there is one common question: "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in deleting the addition of Rs. 2,26,662 (in I.T.R. No. 171 of 1989) and Rs. 4,09,917 (in I.T.R. No. 141 of 89) by holding it to be an application towards object of the trust?" On behalf of the Revenue it is fairly stated that this question is required to be decided in favour of the assessee and against the Revenue on the question of facts as the amount has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all not be included in computing the total income of a previous year and hence the question is required to be answered in favour of the assessee and against the Revenue. This income is not required to be considered at all even for the purpose of section 11 of the Act. Over and above these questions, the following other question is required to be examined: I.T.R. No. 158 of 1985: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that provisions of section 12 of the Income-tax Act were applicable to donations of Rs. 41,459 which were credited to the suspense account?" In I.T.R. No. 158 of 1985, the question raised is whether the amount being kept in suspense account would qualify for the purpose of exemption under section 12 of the Income-tax Act, 1961, or not? The amount cannot be separated and kept in suspense account but the amount received by the trust is required to be spent for a particular object or it is required to be set apart for the said object. Over and above this, the amount set apart for the object of the trust is required to be communicated to the Assessing Officer in Form No. 10. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ription amounts received by the assessee-trust/society from its members cannot be characterised as voluntary contribution within the meaning of the expression "fund" in section 12 of the Income-tax Act, 1961. Thus, there is a distinction between voluntary contribution and subscription. When a sum is paid in the nature of gift or a gratuitous payment to the trust without any consideration it would be considered as voluntary contribution. Subscription is not to be treated as voluntary contribution. Voluntary contribution is an act not coupled with compulsion. One may contribute or one may not contribute. Therefore, it is rightly said that it is in the nature of a gift. But so far as subscription is concerned, it is with some compulsion. If one wants to become a member of a trust and if he is required to pay subscription, as in the instant case, then, it amounts to compulsion. Sometimes it becomes a question of prestige, i.e., to say, that a person is a member of a charitable institution. If a person had made voluntary contribution to the said trust, then on payment of such contribution he does not become a member. The membership may be coupled with benefits or duties and that all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for religious or charitable purposes, in so far as such income is applied or accumulated for application to such religious or charitable purposes as relate to anything done within the taxable territories, and in the case of property so held in part only for such purposes, the income applied or finally set apart for application thereto." Thus income derived from property held under trust or other legal obligations came to be considered by the court. In the instant case, we are not required to consider whether the assessee can be said to be a charitable trust or not as it is admitted position and not in question. But the question is only with regard to income derived from property held under trust is there or not. By way of subscription, if the amount is received, can it be said that that is income derived from property held under trust. The Bombay High Court observed that the question is beyond the controversy in view of the decision of the Supreme Court in the case of CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722. Under almost identical provisions the Andhra Chamber of Commerce was constituted and when a similar attempt to tax that Chamber was made, one of the questions w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivision Bench further pointed out: "We have already held that the property held under trust was the business or organisation itself and whether we consider either of the two sources of income of this company, namely, the grant or the subscriptions from its members, both arose directly and substantially from that business or organisation. If the organisation had not existed, the grants would not have, been paid to the company nor would the subscriptions have been received by the company. Therefore, even upon the construction put upon the word 'derived' the income would be derived from the business or organisation which we held was the property held under trust in this case." It is in view of this, the question whether on the facts and circumstances of the case, the assessee's income is exempted under section 4(3)(i) of the Income-tax Act or not was answered in the affirmative. In view of the Division Bench judgment of the Bombay High Court, it was submitted by the assessee that the assessee trust is a charitable trust for which there is no doubt. The objects of the trust were placed before the court. We have perused the same and in fact there is no dispute with regard to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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